A significant shift is underway in how the Philippines manages its rice imports. The Department of Agriculture is poised to overhaul the pricing benchmark used for its “flexible” rice tariff scheme, a move intended to more accurately reflect the realities of the market.
Currently, the system relies on the Food and Agriculture Organization’s (FAO) price for a basic Vietnam 5% broken rice variety. However, Agriculture Secretary Francisco Tiu Laurel, Jr. asserts this isn’t representative of what the Philippines actually imports.
The vast majority of rice brought into the country is the Vietnam DT8 variant, a higher-quality grain. Its price, ranging from $430 to $450 per metric ton, consistently exceeds the FAO’s $361 quotation for the 5% broken rice, creating a disconnect in the tariff calculations.
The flexible tariff scheme, initiated earlier this year, allows import duties to fluctuate with global price changes, adjusting in five percentage point increments between 15% and 35%. The original guidelines, however, hinged on the FAO’s benchmark, potentially leading to artificially low tariffs.
In December, the FAO data placed Vietnam 5% broken rice at $361.32 per metric ton, triggering a 20% duty under the existing formula. Despite this, the Department of Agriculture refrained from issuing certification for the adjustment, citing that actual import prices hadn’t fallen low enough.
The current 15% tariff rate remains in effect until the end of March, a decision that has drawn criticism from farmers’ groups. They argue the variable tariffication scheme is designed to favor low tariffs, flooding the market with cheaper imports and driving down prices for local producers.
Farmers are advocating for a return to a fixed 35% tariff, the rate originally in place when the Rice Tariffication Law was enacted in 2019. They believe this would provide crucial protection for local rice farmers.
The tariff was temporarily reduced to 15% in June to combat inflation, but farmers contend that the subsequent drop in landed import costs – as much as 40% to 50% – hasn’t translated into significant benefits for consumers. Instead, they claim importers are the primary beneficiaries.
Jayson Cainglet, of the Samahang Industriya ng Agrikultura, argues that the narrative of “market forces” driving rice prices is misleading. He asserts that importers are shielded while farmers struggle, and consumers haven’t experienced substantial price relief.
The debate centers on whether the tariff adjustments genuinely serve the interests of all stakeholders, or if they disproportionately benefit importers at the expense of local rice production and, ultimately, the consumer.
The Department of Agriculture has yet to announce whether existing guidelines will be amended or new ones issued to reflect the shift to the DT8 variant as the pricing benchmark, leaving the future of the rice tariff scheme in a state of flux.
